Centre Proposes Self-Regulatory Mechanism, Due Diligence For Gaming Companies

Centre on Monday proposed a self-regulatory mechanism, including the mandatory verification of players and physical Indian addresses for online gaming companies, as per the draft online gaming rules. 

Now, online gaming companies will come under the new IT rules that were issued back in 2021 for social media platforms. Online gaming platforms are now expected to obey the laws of the land. This includes any law that relates to gambling, betting or the age at which an individual can be considered competent enough to enter into a contract with a gaming company.

For the Ministry of Electronics and Information Technology (MeitY) to share draft rules for public comments is a very welcoming change. This not only makes the government’s interest in hearing the opinions of all stakeholders apparent but at the same time legitimises and upholds the online real money gaming industry in India. “In my opinion, ethical and responsible practices can definitely establish trust in the public eye for the already soaring industry,” said Deepak Gullapalli, Founder and CEO, Head Digital Works. 

The government’s latest announcement to allow online gaming companies to self-regulate themselves has been received positively by the Gaming Companies. Adding to this, Satyam Rastogi, Founder & CEO, of Khiladi Adda & GamerPe stated, “The onus of self-regulating our companies is an important task which we aim to adhere to responsibly. The principles of responsible gaming will now be even deeper embedded within the industry, thus also segregating the good apples from the bad ones.”

“The draft amendments are aimed at addressing the said need while enabling the growth of the online gaming industry in a responsible manner,” stated the government notice. The draft amendments clearly state that an online gaming intermediary will oversee and ensure due diligence required under the rules, “including reasonable efforts to cause its users not to host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting”.

“The SRO would ensure a robust time-bound grievance redressal mechanism, registration of online gaming intermediaries, promoting responsible gaming through age verification and rigorous KYC process and undertake safeguard measures against addiction, financial distress, etc,” said Sameer Barde, CEO, E-Gaming Federation. 

Commenting on this, Saumya Singh Rathore, Co-founder, WinZO stated that the online gaming industry would significantly benefit from a stable policy framework that renders clarity on what is permissible. “The sector would evolve to be more accountable and thus safer for the end consumers,” added Rathore.

Co-founder and CEO of MPL, Sai Srinivas has similar opinions on the government's initiative. "These rules are also a testament to our industry, where everyone worked together tirelessly in engaging with the government, implementing user safeguards and requested for uniform regulation," added Srinivas. 

The draft rules also state that additional due diligence for companies by displaying a registration mark on all online games registered by a self-regulatory body and informing its users regarding its policy related to withdrawal or refund of the deposit, manner of determination and distribution of winnings, fees and other charges payable and KYC procedure for user account registration.

“Self-regulatory bodies will be registered with the ministry (Ministry of Electronics and Information Technology) and may register online games of such online gaming intermediaries who are its members and which meet certain criteria. Such bodies will also resolve complaints through a grievance redressal mechanism,” stated the official notice.

Nitish Mittersain, Joint MD & CEO of Nazara Technologies believes that there are a lot of details which will need to be studied in more depth. “There’s a one-month consultation period during which we will provide our input to the government. We believe that the draft recommendation will help to catalyze a lot of growth for the industry,” added Mittersain.

Roland Landers, CEO, All India Gaming Federation believes that this is a great first step for the comprehensive regulation of the online gaming sector and that this move will hopefully reduce the state-wise regulatory fragmentation that was a big challenge for the industry. 

"This is indeed a very welcome recommendation placing the onus of responsible gaming on industry players. In an emerging area that is innovative, a self-regulatory approach of this nature helps bring in greater investment as well as accelerated job creation opportunities in the economy," said Rajan Navani, President of the Indian Digital Gaming Society and Founder, JetSynthesys. 

As per the official notification, MeitY has invited public comments on the draft rule by 17th January 2022.

The proposed revisions to the IT (Intermediary Rules and Digital Media Ethics Code) Rules, 2021 with regard to the online gaming industry will emphasize the constitution of a self-regulatory body (SRO), which would be registered with the Ministry of Electronics & IT, with a focus on light-touch regulation. Given the situation, it will be interesting to see the developments that will come up in the next few weeks.